Hospital labor study reveals hidden costs of nurses

Despite popular belief, wages and payroll costs are only part of all-in hospital nursing labor costs, according to a 2011 U.S. Hospital Nursing Labor Costs Study conducted by KPMG, released yesterday. The study, which evaluated current labor costs and discussed future labor strategies, included data from 120 senior hospital executives, including CEOs, COOs, CFOs, chief administrators, and directors of human resources.

Although nurse wages and payroll accounted for 76-78 percent of total costs, other costs came from nonproductivity costs (11-12 percent), insurance (8-9 percent),recruitment (1-2 percent), and other (1 percent), according to the study.

The actual cost per hour for a full-time, direct care hospital registered nurse is, on average, 176 percent of his or her base hourly wage. The cost is $98,000 per year ($45 per hour). Of that, base wages accounted for $55,739 per year ($25.84 an hour).

More hospitals are increasingly using traveling nurses, up 12 percent from 2010, according to the study. Two-thirds of senior executives reported they utilize traveling or per diem nurses, basing their decisions on supply and demand, as well as quality of the nurses. However, other hospital execs reported not using traveling nurses and instead utilizing extra full- or part-time employed staff, offering incentives to reduce turnover and encouraging overtime.

For more:
- download the full study
- read the KPMG press release